Primer: E-Discovery

What is it?E-discovery refers to finding and producing documents stored in electronic form in response to litigation or regulatory requirements. Civil litigants, regulators and criminal prosecutors now commonly ask for copies of selected e-mail communications or make broad requests for all electronic records. That trend will only intensify after Dec. 1, when changes set to take effect in the Federal Rules of Civil Procedure make e-discovery a standard part of federal proceedings.

Why should I care? Responding can be a burden, particularly if corporate archives are poorly organized and difficult to search. Costs include the information systems expense of locating backup tapes, restoring data and extracting relevant information, as well as fees paid to lawyers for reading through thousands of pages of poorly sorted and categorized documents.

"Managing electronic discovery is probably a number-one initiative at all legal departments," says Patrick Oot, who leads an e-discovery team of three attorneys and an information-technology liaison at Verizon. "Depending on the volume of litigation an organization has, this can be one of largest line items in your [legal] budget."

In addition to contracting with service provider nMatrix for current legal data management needs, Verizon is working on a new archiving system that will make data easier to import into document review tools for lawyers, allowing the firm to manage e-discovery "much faster, much easier and at much lower cost," Oot says.

Click here to find out what happened to German investment bank WestLB after it was hit with a sex discrimination suit—and had to dig up 650,000 e-mail messages and documents.

What are the information-technology issues?

There are several:

You should examine document and e-mail archiving technologies should be reexamined to ensure they can recover potential evidence, in addition to their backup and disaster recovery functions.

You may need to revise document and e-mail retention policies. Unless you are in an industry such as financial services with specific regulatory requirements to keep e-mail and instant messages, you may want to delete old messages on a regular basis. However, you must have a consistent policy and be able to halt the destruction of potential evidence promptly in response to a court order.

You should determine whether data is being retained inadvertently, perhaps on individual PCs or backups from PCs, even after it has been deleted from central corporate archives.

You should check out e-discovery tools and services, which can help speed the recovery of data from backup tapes or other media and shorten the time required to search for relevant information.

Although suites of discovery and archiving tools are appearing on the market, you shouldn't necessarily expect the solution to come in one box. Retention policies have to be decided by management before they can be implemented in technology, for example, and the technical impact extends into existing messaging, content management and backup systems. What if I can't produce the data? Make sure you can point to a good reason, such as a retention policy under which data was routinely deleted. But beware of giving a judge the opportunity to think the real reason is that you're not trying hard enough. In a fraud lawsuit brought by Coleman Holdings against Morgan Stanley, a Florida judge lashed out at Morgan Stanley for fumbling the recovery of archived e-mail--and told the jury it could assume the firm was deliberately hiding evidence of guilt. In May 2005, the jury awarded $1.4 billion in damages; Morgan Stanley is appealing.

Renew Data, a compliance and e-discovery services firm that the court hired to independently examine the contents of the Morgan Stanley backup tapes, found e-mails Morgan Stanley had missed on one set of archives and more e-mails on another set of tapes that wasn't supposed to contain any e-mails at all, according to Renew Data CEO Robert Gomes.

How much of this is about e-mail? "E-mail, right now, is the great albatross for most organizations," says John Bace, a Gartner analyst specializing in the legal and regulatory issues of information technology. Though intended for relatively informal communications, rather than official corporate record-keeping, "E-mail has developed into something more like the central nervous system of a company, something it was never intended to be," Bace explains.

As a result, litigants have latched onto e-mail as a treasure trove of information about the thoughts and intentions of company employees. "I can't think of a regulatory or litigation [action] that doesn't ask for e-mail," says UBS general counsel Toni Tomarazzo.

Making matters worse, e-mail is unstructured data, making the search for relevant information more like a Web search than a more orderly database lookup. Other forms of unstructured or semi-structured data, such as the contents of wikis and other collaboration tools, could also be targeted for discovery.

Although by policy UBS doesn't endorse individual vendors, Tomarazzo says she recommends finding a service provider that offers a turnkey suite of technologies to preserve e-mail; archive it on write-once, read-many backup media; extract messages on request; and provide review and classification tools for lawyers.

David F. Carr is the Technology Editor for Baseline Magazine, a Ziff Davis publication focused on information technology and its management, with an emphasis on measurable, bottom-line results. He wrote two of Baseline's cover stories focused on the role of technology in disaster recovery, one focused on the response to the tsunami in Indonesia and another on the City of New Orleans after Hurricane Katrina.David has been the author or co-author of many Baseline Case Dissections on corporate technology successes and failures (such as the role of Kmart's inept supply chain implementation in its decline versus Wal-Mart or the successful use of technology to create new market opportunities for office furniture maker Herman Miller). He has also written about the FAA's halting attempts to modernize air traffic control, and in 2003 he traveled to Sierra Leone and Liberia to report on the role of technology in United Nations peacekeeping.David joined Baseline prior to the launch of the magazine in 2001 and helped define popular elements of the magazine such as Gotcha!, which offers cautionary tales about technology pitfalls and how to avoid them.